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Comment by DrWAVeSport Cd1 on June 8, 2008 at 3:13

Greyshades...Good Sunday morning to you. Thanks for the info. I do believe that the statutory force pooling is very different from the old "rule of capture." However, in the climate (looking at $13 for NG and $150 per Oil) don't you think that the costs associated with drilling, etc. are not nearly as threatening (again I say, under the conditions of today's prices) statutory force pooling is not so ominous a thing as it maybe has been in the past (80's and 90's)?

And, if the Chesapeakes, and the Petrohawks, and the Goodriches, and so on and so on...are willing to bet the farm, so to speak, on this Haynesville shale bonanza...the Barnett bonanza..., etc., then the force pooling is kind of like having your investment in the making of a hit movie, when the real money is made a year later when the DVD comes out.

I still cannot find a scenario...in this strike...where a mineral owner is dealing with bills from the O&G company from being statutory force pooled...in LA...

If the moneys are so great that O&G companies are willing to go into Billions of dollars of debt and spend Millions/Billions to purchases leases....just for the "promise"...it would seem to lessen the "scariness" of possibly finding yourself in this kind of situation. And...that is what I really have been looking for...someone with knowledge...who could tone down some of the "disaster" comments that are being made concerning same. (i.e., disaster for landowner).

Thank you for your reply. Am enjoying your comments to fellow bloggers.
And...agree with you..."What the X#@% am I doing blogging this stuff at 10:30 p.m on a Saturday night!" (Ha! Ha!)

Nice to meet you, blogwize. DrWAVeSport 6/8/2008
Sunday morning, coffee in hand, laptop in lap!

Comment by Greyshades on June 7, 2008 at 16:36

Also, and this is an important point: In Louisiana, if an operator has not leased your property to someone else, they CANNOT come on your land and drill on it. It just gives them the right to produce from the common reservoir, subject to your rights as an unleased mineral interest owner.

What in the hell I'm doing reading this at 10:30 on a Saturday night, I do not know. Best wishes all.

Comment by Greyshades on June 7, 2008 at 16:33

Sorry, but Frederick Scott CMM is WRONG about how conservation units work in Louisiana. The process he is describing sounds like what they do in Oklahoma.

Of all of the topics I have seen addressed in the media and online, the least understood appears to be compulsory unitization, or "forced pooling" as some like to call it. The law on compulsory unitization was introduced in Louisiana in the 1940s-1950s. Before that law, oil and gas production in Louisiana basically operated (with some exceptions) on a “rule of capture” -- if you could drill under your land and get at it, it was yours and yours alone. Of course, that meant your neighbor could drill a well on his property and keep all of the mineral production, even if he was theoretically draining minerals from under your property. Your only solution was to drill your own well and extract the minerals faster than your neighbor.

Compulsory unitization says that everyone in the unit will share in the production from a well drilled inside the unit, regardless of where in the unit the well is drilled, based on their acreage as a percentage of the total unit acreage. However, no one gets a free ride – all persons inside the unit have to bear their share of costs.

If you have signed a lease, you have basically authorized the lessee to take your share of the unit revenue, bear all of the costs, in return for paying you a bonus and a non-cost-bearing royalty percentage. If you are an unleased interest owner inside a conservation unit, you get to share in 100% of your share of the unit revenue, but it is subject to your obligation to reimburse the operator for your share of the drilling, completion and operating costs. If you don’t agree to pay your share of costs out of pocket, it gets deducted out of your share of revenues.

Contrary to Mr. Scott's suggestion, Louisiana does not "impose" lease terms on the land or mineral owner like Oklahoma. Louisiana also does not "freeze" people out of units (like some of the Texas folks from Twin Cities Development have been trying to say).